Many people have this misconception that Insurance is a one-time investment that doesn’t require any more adjustments with the passage of time. However, the idea that life insurance can be purchased and then forgotten without being upgraded to meet the family’s evolving needs is untrue and very old.
One needs to understand that term life insurance policies are bought with the purpose of providing financial coverage to their family in case the policyholder, unfortunately, passes away. Hence, one needs to take into account the possibility that in our ever-changing lives, our demands and necessities can shift from time to time. Therefore, it is critical to address our future needs and review our life insurance policies on a regular basis.
Why is it necessary to review your term life insurance policies?
It can all boil down to one thing- Changing needs should be reflected in your life insurance policy. While it may seem like a “matter-of-fact” statement but as we age, our demands also alter dramatically due to the fact that lifestyle changes occur more frequently than we know, which is why we should examine our life insurance policy on a regular basis. This not only makes us informed of our shifting demands and expectations but also allows us to make the best use of our policy by adapting our term life insurance plan in response to any significant change in our lives.
Another fundamental reason for addressing future insurance requirements stems from the fact that insurance purchased five or ten years ago may no longer provide benefits that align with your present needs. Experts recommend that you frequently review your life insurance plans to determine whether the coverage is still appropriate to your financial situation. The fundamental reason for this is how changing times affect our daily demands. One can also take the help of a term insurance calculator to understand the premium outgo if they upgrade the sum assured coverage.
So, if you haven’t checked your life insurance coverage in a while, this is a good day to do so.
Reasons Why it makes complete sense to review your life policy frequently
- Your family has grown: Starting a family, getting married, or having children are some of the most major changes in somebody’s life. Following such changes, it is imperative that your lifestyle both financially and mentally will shift. This paradigm shift necessitates the policyholder to review his/ her life insurance policy.
On average, it costs around Rs 20-25 lakh to raise a child from birth to 21 years of age. Have you ever wondered how this much money will be handled while you are away? As your family grows, it is prudent to increase your sum assured coverage that can take care of children’s education, debt repayment, and so on. If you believe that your current sum assured will be insufficient to meet your family’s expanding needs and demands, you can increase the sum assured by paying an additional premium. Use a term insurance calculator to understand the premium outgo that can help you budget your monthly expenses.
- You got a home loan: Purchasing your own home is still one of the biggest assets in India today. At the same time, it is the largest financial obligation. It is absolutely essential for the policyholder to purchase a term life insurance policy for at least the same amount as your home loan amount.
For example, if you buy a new property with a Rs 3 crore loan and have a life insurance policy with a death benefit of Rs 1 crore, you must update your policy. That’s because a home loan is a significant financial obligation. If you unfortunately die while the ‘period’ of the policy is still in effect, your family will be able to pay off the home loan with the help of the death benefit. As a result, adjusting your sum assured to match the amount of your mortgage will release your family from debt.
- Change in your Career Pathway: Your professional trajectory improves with time which is reflected in the ascending shift in your income. As a result, whether you receive a promotion or your compensation has increased, you should examine your life insurance coverage. It not only helps your family retain their current lifestyle but also allows you to make systematic investments. How much monthly outgo will be from your current salary can easily be known using the term insurance calculator.
- Beneficiary Change: You may need to modify your beneficiary based on the circumstances in your life. For example, getting married may prompt you to alter your term life insurance plan and include your spouse as a beneficiary. Similarly, in the event of a divorce, you may wish to remove your former spouse as a beneficiary from your insurance. As a result, it is important to examine your beneficiaries on a regular basis to verify that you are covering the correct individuals under your policy. Neglecting the same may result in uncomfortable situations and put your death benefit in the wrong hands which of course you don’t want.
So we are saying,
As a result, examining your life insurance policy on a monthly basis is a good idea because it allows you to keep track of your financial demands and whether your current term life insurance plan effectively meets them or not. So, regularly update your life insurance coverage to reflect changes in your life and make the most of your chosen policy. For those who find it confusing to know how much sum assured they need can use a term insurance calculator to know the amount.